Early in 2010, Samsung was formed with authorization to issue 10,000 shares of 2 par value common stock and 20,000 shares of 80 par value cumulative preferred stock.

During 2010, all the preferred stock was issued at par, and 6,000 shares of common stock were sold for 20 per share. The preferred stock is entitled to a dividend equal to 12 percent of its par value before any dividends are paid on the common stock.

During its first five years of business (2010 through 2014), the company earned income totaling ,3,000,000 and paid dividends of 0.5s per share each year on the common stock outstanding.

On January 1, 2012, the company purchased 1,000 shares of its own common stock in the open market for 40,000. On January 2, 2014, it reissued 600 shares of this treasury stock for 30,000. The remaining 400 shares were still held in treasury at December 31, 2014.

1. In the event that you, acting as CFO of a Public listed company want to make an investment explain the difference between choosing:

a)Bank loan with covenants

b) Issuing Bonds

c) Issuing shares

d) Issuing preferred Stock.

What would be the impact on Net income, EPS, PE ratio, Debt to Equity, Debt to Assets.

2.-What is the difference between bonds issued at discount, par or premium. (5 points)